Question

Explain what is the "End-of-period" convention and why is it used.

Explain what is the "End-of-period" convention and why is it used.

Homework Answers

Answer #1

"End -of-period" convention is nothing but in accounting assumption where it is assumed that on the cash flows that happen during the course took place at the end of the accounting period. This convention is indeed helpful because it is not possible to generate the cash flows every minute of the period and forecast with with interest of some values. Such a convention simplifies the method in the calculation of periodical payments and annual payments cost of debt etc

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